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Oil pares losses after fall to $71

LONDON - Oil was weaker after falling for a third straight session on Thursday to touch a new 13-month low near $71 a barrel.

Crude has dropped more than 50 percent from a July peak above $147 a barrel, as fears of a global recession have prompted waves of selling across stock markets and commodities.

U.S. crude for November delivery was 50 cents down at $74.04 a barrel at 1241 GMT.

The front-month contract has lost nearly a third in value in three weeks, the steepest such decline since it began trading in 1983.

London Brent crude was down $1.40 at $69.40.

"Economic weakness is hitting the stock and oil markets, but the oil price fall is also reflecting a lack of demand. It is very difficult to buy oil if you are having a hard time getting credit lined up," said Francisco Blanch, head of commodity research at Merrill Lynch.

Analysts have scaled back global oil demand growth estimates after a slew of gloomy economic data that suggest the credit crisis has begun to undermine economic growth in the United States, the world's top energy consumer.

Bernstein Research became the latest to cut its 2009 oil price view to $70 a barrel from $90 a barrel, while lowering its 2010 oil estimate to $80 from $95.

OPEC

The Organization of the Petroleum Exporting Countries also reduced its forecasts for world demand for crude next year in its latest monthly report published on Wednesday.

The producer group has called an emergency meeting in November in Vienna to assess the implications of the global financial crisis on the oil market.

There are expectations it may take action to support prices, that have been hit by the deleveraging process across commodity markets.

Venezuelan President Hugo Chavez said oil prices would probably keep falling as the U.S. economy headed south.

"The price of oil is falling? Yes. The price will carry on falling? Probably. But Venezuela will not drown," he said. Venezuela is one of the United States' biggest oil suppliers, with about half its government revenue derived from oil.

U.S. weekly oil inventory data to be released later on Thursday is expected to show crude oil stocks rose for the third straight week, gaining 1.9 million barrels, while distillate and gasoline stocks are also forecast to have increased following weak demand, a Reuters poll showed.

Hurricane Omar, which disrupted shipments from Venezuela this week, strengthened into a major Category 3 storm on Thursday as it headed toward Puerto Rico and the northeastern Caribbean, but was on a northeast trajectory away from the U.S. Gulf, the National Hurricane Center said.